File photo contributed by KINDER MORGAN)

CPP Investment Board taking a look stalled Trans Mountain project

CPPIB has yet to begin a formal analysis or receive any confidential information

The federal government’s financial adviser has raised the possibility of the Canada Pension Plan Investment Board becoming involved in the Trans Mountain pipeline project but there’s been no political pressure applied, CPPIB chief executive Mark Machin told a parliamentary committee Monday.

The Toronto-based fund manager and its peers will likely take a look at the stalled Trans Mountain project because there are a limited number of investment opportunities of its magnitude, but CPPIB has yet to begin a formal analysis or receive any confidential information, Machin told Commons finance committee.’

RELATED: Key dates in the history of the Trans Mountain pipeline

His testimony came less than two weeks after the government announced it would buy the project for $4.5 billion from Kinder Morgan, to ensure the pipeline will be completed, with the intent of selling it at a profit in time.

Machin insisted, in answer to a question by Conservative MP Pierre Poilievre, that there had been no contact between CPPIB and Finance Minister Bill Morneau or any other member of the Liberal government.

But Machin said that CPPIB has been approached by Greenhill & Co., a small investment bank that has been hired to advise the government on selling the Trans Mountain project.

“I believe they’ve approached every — a lot of — funds domestically and internationally,” Machin said.

RELATED: Kinder Morgan wants Fraser Valley ALR land for work camp and storage yard

“At this stage, we haven’t done any analysis. We’re still evaluating the situation. Obviously, we have an obligation to investigate and to assess any major investment opportunity that comes along. And to fully understand all of the risks, all of the potential returns and understand the fit for our portfolio as well.”

The issue of political pressure is relevant because the CPPIB was set up in the late 1990s to be an independent manager of funds on behalf of the Canada Pension Plan, an employer and employee-funded retirement system.

As of March 31, when CPPIB’s financial year ended, it managed a fund with $356.1 billion in net assets, up from $316.7 billion at the end of fiscal 2017 and $278.9 billion at the end of fiscal 2016.

Morneau has predicted the Trudeau government will have no difficulty selling the Trans Mountain pipeline expansion project after uncertainty about its future is resolved.

The federal government’s hand was forced by B.C. Premier John Horgan, who is waging a court battle over the federally regulated pipeline, which would carry diluted bitumen from Alberta’s oilsands to a sea port near Vancouver.

Machin told the finance committee that the Canada Pension Plan Investment Board has a mixed track record with pipelines and will use its usual approach when deciding whether to put money into Trans Mountain.

In general, he said, a major factor to consider is regulatory risks — pointing out that CPPIB and its co-investors in a European pipeline were caught by surprise when the Norwegian government made a significant change in the tariff regime — or pricing structure — shortly after the deal closed.

“We’ve been in legal proceedings for a number of years now,” Machin said.

“That is part of the regulatory risk. It’s a really critical part of due diligence to understand regulatory risk for any infrastructure investment.”

The federal government decided to buy Trans Mountain after Houston-based Kinder Morgan threatened to walk away from the pipeline expansion due to political uncertainty, particularly because Horgan’s New Democrat government said it will do everything in its legal power to stop the pipeline because of unresolved environmental concerns.

Machin told the committee that the CPPIB hasn’t made a formal evaluation of Trans Mountain “purely because it’s at an early stage and we haven’t got any confidential information, or any information, to assess the situation yet.”

The Ontario Teachers Pension Plan — another of Canada’s independent retirement fund managers — indicated last week that it had a financial obligation to take a look at the potential of Trans Mountain.

Like us on Facebook and follow us on Twitter.

Just Posted

Darrell Paulovich remembered after accident claims his life

A tragic accident claimed the life of a rodeo advocate over the weekend

Bashaw School’s JV girls volleyball team lose to Ponoka

The girls played St. Augustine’s JV Queens losing a tough match

Ponoka County plays host for area municipalities during emergency training

A grant through Red Deer County and AEMA brings multi-day disaster training to responders

Bashaw Minor Hockey numbers down slightly with losss of bantam club

Four local teams once again taking to the ice this season with games beginning this weekend

Bashaw community groups among those to be invited to speak on new strategic plan

Council, consultant looking for suggestions and direction for revised long term outlook of Bashaw

Secret supper clubs test appetite for cannabis-infused food ahead of legalization

Chefs are eagerly awaiting pot edibles to become legal in Canada

Andrew Scheer on revamped NAFTA deal: ‘I would have signed a better one’

Conservative leader says he wouldn’t have signed USMCA

Dad files Charter challenge after B.C. bans kids from taking transit unsupervised

Adrian Crook is taking his fight to B.C. Supreme Court

Police investigate alleged arson at Toronto hotel housing asylum seekers

Police believe the fire was started intentionally, but they have not spelled out a possible motive

WATCH: Lots of rodeo action at Cowboy Classic Finals Rodeo

Many Red Deer contestants will be competing all weekend long

Atlantic Canada sees heavy rains, winds from post-tropical storm Michael

Parts of Newfoundland were forecast to get up to 40 millimetres before the storm is set to head out to sea

High times: optimism in Smiths Falls, the little town that marijuana saved

Home to fewer than 9,000 people, the Ontario town had become all too familiar with the pain of economic hardship over the years

UPDATE: Man dies in fiery multi-vehicle collision near Ponoka

Icy roads considered a factor in a serious three-vehicle collision on Highway 2

Most Read